Soybean shipments to China dropped sharply in mid-October from a year earlier and are expected to continue falling.

China placed a 25% tariff on US soybeans to retaliate against the Trump administration.

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As trade tensions between Washington and Beijing drag on, American soybean farmers are seeing falling prices and rising inventories as they scramble replace their biggest market.

The Agriculture Department lowered its production and export outlook, according to a report out Thursday, and increased its inventory estimates. Projected exports were lowered by 160 million bushels to 1.9 billion for the 2018-2019 marketing year, with lower imports projected for China. Ending soybean stocks estimates came in at 955 million bushels, well above analyst estimates of around 898 million bushels.

Soybean prices have fallen to multiyear lows, trading around $8.65 a bushel, on the back of demand concerns. Beijing placed a 25% import tax on the legume in July to retaliate against the Trump administration, which argues protectionist policies will help force changes to trade policies it sees as unfair.

Soybean shipments to China have dropped sharply since then as Beijing turns to South America and other countries with fewer trade barriers. Exports to that country were down 94 percent in mid-October from a year earlier, the New York Times reported Monday.

That’s a big deal for American farmers, who have seen inventories swell to record levels. China is the largest destination for soybeans in the world, accounting for more than half of global imports in 2017.

In July, the Trump administration unveiled $12 billion in emergency aid to farmers who risked suffering financial losses from its trade policies. Soybean farmers were poised to get a large portion of benefits from the controversial plan.

"I think most farmers would say they’d rather sell to the market than sell to the government," said Kevin McNew, an economist at the Farmers Business Network. "And it’s a one-time program, while we’re talking about long-term implications. It’s not even going to come close to making farmers whole."